- Risk-off dominates amid trade, Geopolitical tensions.
- The latest improvement in global politics might offer intermediate relief amid overall uncertainty.
The USD/JPY pair holds its weakness while taking the rounds near 108.30 at the start of June’s first week on Monday. The quote slipped noticeably on Friday after global markets preferred risk safety amid the latest challenges to trade from the US.
The US President Donald Trump turned angry on Mexico due to illegal migration and levied 5% tariffs on its products reaching his land during the early-day announcement. The fresh tariff is subject to rising to 25% if the Mexican government fails to solve the issue by October, President Trump’s tweet said.
While the US-China trade tussle was already taking a toll on global sentiment, news of the US-Mexican differences added fuel to the risk aversion.
Not only trade but the Geopolitics were also in the spotlight after Iran-Iraq indulged into war or words with some Middle East leaders supporting Iraq.
Latest news reports from the global political frontier suggest some improvement in the situation as Mexican President is hopeful of a positive talk while he reaches the US this week while the US Secretary of State Mike Pompeo also conveyed the US-Iran talk without any preconditions.
However, trade negative news was also present as China’s white paper highlighted the US-side as a reason of latest failed trade talks while it also prepared a list of the US companies to put under its blacklist, including Fed-Ex. Further, the Euro might face difficulties as the German coalition partner resigned.
Looking forward, Japan’s first quarter capital spending data and the US ISM manufacturing purchasing manager index (PMI) could entertain traders via the economic calendar. The capital spending could increase to 11.6% from 5.7% whereas the US manufacturing gauge might also rise to 53.3 from 52.8.
While 108.00 and 107.50 gain high importance for sellers unless the prices trade beneath 109.20, buyers may aim for 109.80 and 110.30 should the quote regain its strength.